Goldman Halts Coverage of AOL, Disney; Fires Analysts
By Stephen Cohen
New York, Feb. 27 (Bloomberg) -- Goldman Sachs Group Inc., the world's third-largest securities firm by capital, dismissed six analysts and suspended research on more than 40 companies, including AOL Time Warner Inc., Walt Disney Co. and Fannie Mae, seeking to cut costs as declining stock markets curb revenue.
Media analyst Rich Greenfield, financial-services analyst Howard Shapiro and paper analyst Mark Weintraub left the firm, said Ed Canaday, a Goldman spokesman. The firm also let go a pair of analysts in Canada and one in Latin America.
The cuts show securities firms will keep reducing their work force as their business slump deepens. Goldman, last year's No. 1 mergers adviser and stock underwriter, fired more than 2,900 employees in 2002 as earnings declined 8 percent and revenue slid 12 percent. Goldman has about 19,700 employees.
Goldman's Chief Executive Officer Henry Paulson a month ago forecast more job cuts. ``I'm not calling an upturn this year. If the situation worsens or doesn't get better, we'll take more people out of the business.''
Investigations
Institutional investors use the research generated by securities firms such as Goldman to guide investment decisions. The largest U.S. securities firms in December agreed to pay $1.4 billion to settle allegations they misled investors with biased research aimed at winning investment-banking fees.
The latest analyst firings are unrelated to the settlement, said Goldman spokesman Peter Rose. ``It has nothing to do with the regulators,'' he said. He cited ``market conditions'' for the move.
AOL Time Warner was on Goldman's ``recommend list'' until Greenfield downgraded it to ``market perform'' on July 25, 2002, after the stock had plunged. He downgraded it to ``underperform'' in November. Greenfield had worked at Goldman for seven years. He also covered Cox Communications Inc., Fox Entertainment Group Inc. and other media companies.
Shapiro covered financial companies including Golden State Bancorp, Charter One Financial Inc. and SLM Corp. Weintraub followed paper companies including Weyerhauser Corp. and Georgia Pacific Corp.
``We expect to resume coverage of stocks in these sectors in the future,'' Canaday said. The three analysts didn't return calls seeking comment.
Canada, Latin America
Goldman is dismissing some analysts in Canada and Latin America as it consolidates coverage of the two regions. Analysts covering some companies in Latin America and Canada will be based in New York under the new structure, Canaday said.
In Canada, Goldman fired Tim Newington, who followed media companies including Cogeco Cable Inc. and Rogers Communications Inc. The firm also let go Jonathan Dorfman, who followed companies such as Telus Corp. In Latin America, Gordon Lee, who covered conglomerates and other industrial companies, was also dismissed.
Newington didn't return messages seeking comment, and Dorfman and Lee couldn't be reached for comment.
``We have realigned and strengthened our sector research teams across Latin America, Canada and the U.S. by combining previously separate regional teams into single teams,'' Canaday said. ``We believe our clients will benefit from more closely coordinated fundamental analysis and more effective and integrated communication.'' |
